Insurance broker directors pocketed £1m from customers

The directors of Chorley-based brokers Ideal Insurance pocketed an estimated £1m from selling customers fraudulent policies that “were not worth the paper they were written on”, a crown court has been told.

Neil McKay and Faron Wilson, joint directors of Ideal Insurance, routinely kept monthly premiums paid by customers and regularly cancelled the policies that many of their clients had taken out with them, it was alleged.

Clients, typically from small businesses such as hotels and pubs, were totally unaware that the insurance policies they had taken out with the company were worthless, London's Southwark Crown Court heard.

Opening the case, Jenny Goldring, prosecuting, explained that the scam had run between 2003 to 2008.

She said: "Over several years they accepted insurance premiums from a number of policy holders, but didn't provide them with proper cover. They took the premiums and cancelled the policies without telling them what was going on."

The court was told that customers would take out insurance with Ideal only for the company to pocket the monthly premiums. Alternatively customers would take out a policy only for Ideal to later cancel it without telling their client.

Also Ideal would issue insurance certificates that they told their customers had been underwritten by Lloyds and other respected firms. But in reality, these bogus certificates "were not worth the paper they were written on", Ms Goldring told the jury.

The money generated from the fraud was estimated to exceed £1m, she said.

Wilson, 40, the only defendant, denies one charge of conspiracy to defraud and two charges of fraudulent trading.

Goldring added: "Mr McKay has accepted responsibility for fraudulent activities while at Ideal Insurance."

The scam was revealed after insurance broker Primary General complained to police about Ideal’s business practices in 2008.